European shares rise as Wall Street rallies; ECB decision in focus

Kindred jumps on takeover bid from FDJ

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Belimo slips on annual revenue miss

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Technology, financial stocks lead sectoral gains

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STOXX 600 up 0.8%

Jan 22 (Reuters) - European shares rose on Monday with tech stocks leading the charge, tracking a Wall Street rally that drove the benchmark S&P 500 to fresh record highs while investors awaited the European Central Bank's policy decision later this week.

The pan-European STOXX 600 index ended 0.8% higher following a 1.5% decline last week. The S&P 500 index logged a fresh record high on Monday, topping the all-time peak it hit last week that was fuelled by a rally in U.S. chipmakers and heavyweight technology stocks.

Technology stocks in the euro zone climbed 2.1% on Monday, and led gains among sectoral indexes.

ASML Holdings rose 3.1% after Bernstein upgraded the Dutch semiconductor equipment maker's rating to "outperform" from "market-perform".

Government bond yields across the continent eased, with the benchmark German 10-year government bond last standing at 2.26%.

Investors are waiting for the ECB's monetary policy decision, due on Thursday, for clues on the timing of future interest rate cuts.

"We continue to believe that a shortening of the policy horizon of the ECB increases the relevance of its own inflation projections for policy decisions ... so long as the ECB projects 2025 inflation above 2%, we expect resistance to rate cuts to remain strong," economists at Citi wrote.

"Once those projections fall below 2%, we expect pressure to ease policy to become irresistible ... we expect this will be the case in June, but not earlier."

Traders have priced in a cut of about 130 basis points in interest rates this year, with a 96% chance of the first cut coming in June.

The banking sector jumped 1.3%, helped by a 2.8% gain in Barclays after an upbeat view from Morgan Stanley, ahead of the British bank's annual results and investor update next month.

On the downside,

Commerzbank

shed 3.4% after BofA Global Research cut the German lender to "underperform" from "neutral".

Belimo

dropped 7.8% after the Swiss heating and ventilation solutions maker's 2023 revenues missed market estimates.

Italian shares were an outlier, down 0.3%, weighed down by a 2.2% fall in luxury car maker Ferrari .

Among other movers, shares of Kindred jumped 16.7% after French gaming company La Francaise des Jeux launched a takeover offer for its European online peer in a $2.8 billion deal. La Francaise's shares climbed 6.2%. (Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips and Anil D'Silva)